Don’t Pay Someone Else To Improve Your Credit

The come-ons are hard to miss: The credit-repair companies blare out their promises of boosting your credit score overnight, of eliminating your bad credit and turning you into someone with whom mortgage and auto lenders actually want to work.

Problem is, none of these companies can boost your credit scores. And they certainly can’t do it overnight. The for-profit credit-repair industry is a scam.

Here’s the truth: The only person who can improve your credit score is you. You are the only one who can take the steps necessary to turn a low score into one that will guarantee you the lowest interest rates and best loan products.

Today’s mortgage, auto and personal loan originators rely on your three-digit credit score, also known as your FICO score, to determine if you have been a responsible borrower in the past. If you have been, they’re more likely to lend your money at reasonable interest rates. In general, borrowers with a credit score of 720 or higher will qualify for the best interest rates. Those with scores below 620 will almost always be relegated to the world of sub-prime loans, where they’ll be stuck with higher interest rates and fees.

Because credit scores have become so important, an entire cottage industry of credit-repair firms has hit the scene. These companies, who haunt late-night TV and radio, promise that they can instantly boost your credit score. They promise to lead you away from the sub-prime loans into the rarified world of “A”-paper lending.

Too bad it’s all false. There are three ways in which you can increase your credit score. First, you can order your free credit reports from AnnualCreditReport.com and study them carefully for any mistakes. If you find a missed car payment that you know you made on time, you can notify the national credit bureaus in writing. Once the bureaus remove that mark against you, your score will improve.

Secondly, you can start paying all your bills on time all the time. This will gradually increase your credit score. So will paying down your monthly revolving – usually credit card – debt.

Unfortunately, none of these steps will hike your scores immediately. Credit repair is a long process that requires patience. You may have to wait a year or more for your score to rise high enough to make borrowing money for a house or car a financially sound move.

These steps are all also ones that you can take on your own, without the help of any outside credit repair company. Never pay an outside company to do what can do on your own for free.